The UK is lagging behind others on the digital identity front. But why? Martin Wilson, CEO of Digital Identity Net, explores this and what can be done to accelerate the UK’s digital identity ecosystem.

In September 2021, the Department for Digital, Culture, Media and Sport (DCMS) published the updated version of its digital identity trust framework. The framework – a set of standards, rules and best practices – is intended to bring clarity to the development of an ecosystem of digital ID schemes that can be used across the private and public sectors.

What is digital identity?

The subject of digital identity took off at the end of 2021 as the UK introduced a digital COVID pass, which was met with serious concerns about data privacy, civil liberties and the introduction of a national identity scheme by stealth.

These recent developments from government, alongside market movement and changing consumer demands, such as the growing uptake of digital services including GP appointments and education, illustrate the increasing focus on the necessity of digital identity solutions in the UK.

The UK’s digital identity crisis

What many people don’t realise is that they already give up their identity data online every day. They painfully and repeatedly fill out the same details of name, address, email, phone number and passwords; scan documents, take awkward selfies and share sensitive, personal information.

If they do think about websites tracking their activity and storing this data, they envisage images of nefarious actors like hooded strangers on the dark web. But all sorts of websites, including social media platforms, have a huge amount of data on each of us. But just how do you protect your digital identity?

Being online is the new Wild West, with most of us not knowing where this data goes or how it is used. It is estimated that we all have over 200 digital identities on the web right now, without any control over what that data is being used for, or who has access to it.

For a country that was one of the pioneers of open banking, the UK is far behind many countries in the provision of a digital identity service. For example, in Sweden, Norway and Belgium, this trusted utility is provided by a platform linked to the banks in those regions.

These systems have seen strong adoption and usage:

  • BankID Sweden achieves 840 interactions per user per year – and is used by over 98% of those aged 21-67.
  • BankID Norway has 99% market penetration within the adult population and 215 transactions per user per year.
  • itsme® in Belgium has onboarded over 60% of the population.

Public-private collaboration

Introducing a digital identity system undeniably requires significant input from the government – but we cannot leave it up to them entirely.

A successful public-private collaboration is imperative to ensure the success of digital ID. With McKinsey reporting that digital ID could unlock economic value equivalent to 3% of GDP in the UK, a successful partnership between the sectors will be key to quickly deploying a UK solution and stimulate economic recovery.

Certainly, there are specific adjustments and additions that can be made to the digital identity trust framework to ensure it supports the creation of scalable solutions that will benefit all UK citizens to their fullest potential.

Leveraging existing standards in digital identity

One such addition to be taken from the private sector is the leveraging of existing private sector standards and infrastructure – such as anti-money laundering (AML) and open banking – to minimise the cost of implementation.

There is an opportunity to build on existing capabilities, infrastructure and data repositories to accelerate availability and adoption of digital identity. This is a win-win, with a faster development process and maximised benefits for the UK.

There is no need for the creation of new identities – existing identities authenticated to AML standards are already established with banks and can be reused. What’s more, using such systems means almost entire market coverage from day one, with 98% of the adult UK population immediately having access through their own bank account.

The UK is already behind many in the identity space. With our world-leading open banking capabilities, we have an opportunity to take the lead in identity, too.

Fostering social inclusion in digital identity

As well as unlocking economic growth, good digital ID systems hold the promise of fostering increased inclusion, providing greater access to goods and services to all. This inclusion needs to – and can be – achieved by UK digital ID if broad adoption and interoperability drive the creation of policy.

The current digital exclusion is much more than simply a lack of reliable online access, with the digital shift creating new challenges for individuals to prove their identity online. This impacts access to finance, health and other essential services. Just in the past year, major issues have included citizens not being able to access Universal Credit or COVID-19 home-testing kits due to identification failures.

Using open banking APIs to build a digital ID system presents a fast and low-cost route, enabling broad adoption and inclusion through its wide availability. Many UK citizens already have formal identification but cannot use it effectively in the digital world. Allowing them to do so will unlock value by achieving increased inclusion and formalisation, which helps to reduce fraud and increase transparency.

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A specific case to demonstrate such value is access to healthcare. During the pandemic, some online or order-to-home services required patients to identify themselves via credit-checking companies, which were using electoral rolls to verify individuals.

Those not on the open register – often for safety or privacy purposes – could not be verified properly and were refused health services. This disproportionately affects more vulnerable members of society. Established processes, such as securely transferring personal data from open banking APIs, would lower the risk of exclusion from vital services due to issues with digital identification processes. Access to government datasets would also broaden the options for serving those with ‘thin files’ in financial services datasets.

Open standards in digital identity

Finally, future alignment of working and standards between the public and private sector must be well established to enable the development of better digital identity services in both sectors. Better collaboration between the two will progress the adoption and successes of digital ID in the UK, as well as shorten the time to outcomes.

Changes in the provision of digital identity services within the public sector itself – by aligning its standards with the private sector – should be considered to enable competitive ‘buy versus build’ decisions, minimise the cost to the taxpayer and increase speed of delivery.

This release of the trust framework has sparked discussion on the future of digital ID in the UK and has provided a starting point for improved collaboration in the industry. It’s clear that this debate is being monitored closely by senior members of the government who understand the need for digital identity systems. However, we need action now, so UK businesses and citizens don’t miss out on the many opportunities digital identity brings, and to ensure we don’t fall further behind other countries.

About the author

Martin Wilson is CEO of Digital Identity Net, a London-based fintech which aims to make the internet a safer place by enabling people to verify their identity using their bank’s data via open banking. Martin has 25 years+ of experience in digital transformation, having previously been Head of Change for Payments at RBS / NatWest, a VP at HP and Chief Commercial Officer for BACS, Voca and VocaLink.